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Shares of Wynn Macau tumble sharply on card-swipe crackdown report

By Vinicy ChanBloomberg News

HONG KONG — Wynn Macau fell the most in more than two years in Hong Kong trading, leading declines among operators of China’s only legal casinos, amid concern that a reported crackdown on illegal money transfers will pare demand.

The unit of Wynn Resorts slumped 8.5 percent, its biggest decline since October 2011, as of the close of trading in Hong Kong. MGM Holdings dropped 8.2 percent, while Galaxy Entertainment Group fell 7.6 percent.

Macau police have seized China UnionPay mobile card- payment devices that were being used illegally in the enclave to circumvent currency controls, the South China Morning Post said Thursday. The report came days after investment bank Union Gaming Group said Macau may tighten visa rules for visitors from mainland China.

“Investors are now very jittery about all this negative press,” Grant Govertsen, a Macau-based analyst at Union Gaming Group, said by phone Thursday.

China UnionPay said it is implementing risk prevention measures while working with regulators and law enforcement personnel to share information, the South China Morning Post reported. The state-backed debit card company didn’t immediately answer an e-mail seeking comment and its international unit didn’t answer a phone call.

Wendy Wong, a spokeswoman at Macau’s gaming regulator, and Daniel Tang, a spokesman at Macau’s Financial Intelligence Office, a government unit that monitors and probes financial crimes, weren’t immediately available for comment.

China is cracking down on the use of hand-held card-swipers within casino resorts amid concerns that tens of billions of yuan in illicit funds are being taken out of the mainland and into Macau, the South China Morning Post reported Thursday, citing people in the gaming and security business it didn’t identify.

Funds obtained illegally through card-swiping come to an estimated $6 billion, or about 12 percent of Macau’s annual mass-market chips purchased, Karen Tang, an analyst at Deutsche Bank in Hong Kong, wrote Thursday in a note to clients. A decline of that size would pare earnings before interest, taxes, depreciation and amortization for the six largest casino operators in Macau by 2 percent to 6 percent, with Melco Crown and MGM China affected the worst, she wrote.

Tourists from mainland China can legally bring 20,000 yuan ($3,200) into Macau and withdraw as much as 10,000 yuan a day at cash machines with each card they have.

To skirt the limits, visitors can buy goods at a pawnshop using debit cards such as UnionPay and trade them in for the local currency at the same store. Pawnshops also lend local currency to gamblers.

The use of mobile card-swiping machines to provide visiting gamblers with local currency has caused the pawnbroking business to slump, the South China Morning Post reported, citing industry group the Macau General Chamber of Pawnbrokers. Chou Chin Leong, the chamber’s president, declined to comment when contacted by Bloomberg News Thursday.

Macau may face a visa crackdown and Macau’s Secretariat for Security indicated tightening measures could be introduced during July, Govertsen and Felicity Chiang, Union Gaming analysts, wrote in research note this week.

State-owned China Central Television reported over the weekend that Macau visitors who didn’t travel on to a third- party country could receive a special stamp on their passport, which could make future visa applications more difficult, according to Union Gaming.

“Judging from past experience, it’s often all bark and no bite,” Govertsen said. “The shortening of a visitor’s stay or the stricter use of cash cards won’t necessarily curb the gamblers’ capacity to gamble.”